Google rejects Senator’s allegations of ‘misusing market power’

Managing director of Google Australia and New Zealand, Jason Pellegrino, disputed allegations the company is abusing its market power, in an appearance before the Senate Inquiry on the Future of Public Interest Journalism this morning.

Senator Nick Xenophon accused the tech giant of demanding publishers adopt the ‘First Click Free’ changes as both Google’s and Facebook’s Australian representatives answered Senators’ questions during the latest Sydney hearings.

The accusations, made towards the end of Google’s appearance, suggested the company was lowering websites in their search rankings if  the publishers did not adopt the program which allows Google and some users to see behind a paywall for free.

Jason Pellegrino, managing director of Google Australia and New Zealand

Xenophon put the “serious allegation” to Pellegrino: “I don’t have permission to mention the publisher but I imagine this has happened to various publishers, that in the last couple of years publishers receive a phone call from a Google Executive saying ‘we demand that you adopt the First Click Free changes that Google implemented in 2016′, essentially telling publishers if they don’t comply with Google’s publishing standards, the website will be placed lower in the search result.

Pellegrino disputed the claims, which Xenophon later described as “classic case of abusive market power.”

“I have to respectfully disagree with that statement,” Pellegrino said.

“I’m not aware of those conversations. I’ve been working in the Google business in Australia for 10 years…I’ve haven’t seen, heard or been aware of any conversation like that.

“What I would say is the first click free policy is standard, it’s not individually applied to news publishers.” He continued, “publishers have a range of options on how to distribute their content. We sent billions of clicks and traffic to publishers every month. But publishers have choice in the operating model,” he said.

Earlier in the hearing, Pellegrino noted it was Google’s “direct interest” to help quality journalism, as it was a matter of “vital public interest,” and as it was necessary to provide Australians with relevant and useful information.

The tech giant refuted claims it was abusing its right as a market power

“This is particularly valuable for smaller and less well-known publishers, or those seeking to enter the market. An independent journalist or small publisher, is today far more able to reach an audience and generate revenue than in years past,” Pellegrino added.

“To that end, our display advertising tools, for instance, help web publishers, including news publishers, to manage the implementation and ongoing placement of advertising on their websites, helping to drive their revenue.”

Pellegrino stated 70% of display ad revenues were shared with host partners, which demonstrated Google’s interest in ensuring publishers’ success, and showed the tech giant’s interest in working with publishers to address shifts in the way Australians engage with news content.

On the topic of fake news, Pellegrino said the first step the company had put in place, was to filter out false content.

He said community flags, internal resourcing, product, and policy, were other initiatives being used to remove fake news from algorithms.

Google is also in collaboration with not for profits, to improve fact checking processes, Pellegrino noted.

Ishtar Vij, head of public policy at Google, added: “We were a founding member of the first draft Coalition, ABC and Fairfax are also the members of that Coalition. To build on what Jason is talking about with fact checking, we have actually launched fact check labels and snippets, as a step to showcase the great work of fact checkers.”

Google’s head of public policy, Ishtar Vij

She said the Attorney General’s department was part of the trusted flagger program, which has been implemented on YouTube.

Asked whether the same steps were in place for Google’s search engine, Vij said:  “We think it’s really important that the lines around what is censored from that availability are drawn by the law and not ourselves.

“We are working through how we handle content that’s harmful.”

Commenting on legislations and potential levies around Google, Pellegrino said: “Senator, the first point to start with is that the setting of legislative frameworks are absolutely the jobs of the government.

“We don’t believe that hand outs, regulation and intervention is the answer. The government is currently investing in public interest journalism through their investments in the ABC and SBS, and I think it’s a matter for government themselves, to decide whether that investment are too high and not enough.

“What we’ve observed overseas is that a tentative positions of content levees, are not affecting the underlying issue, and solving the underlying issue,” he added.

“What they are are supplier side solutions, for what is fundamentally a demand side problem. The challenge is shfiting consumer behaviour from old models into new models.”

He said levies will not help publishers with those changes.

Garlick: Facebook’s head of policy

While Google said it was working with fact checkers locally, Facebook said the company has no immediate plans to work with Australian fact checking organisations, and it does not yet have a resolution for the removal of fake news on its platform.

Facebook’s Aine Kerr, head of journalism partnerships, and Mia Garlick, head of policy, said the company did not pull fake news accounts, only removing accounts for suspicious behaviour.

Garlick could not provide assurance Facebook was going to work with Australian fact checking organisations to resolve the issue of fake news.

“I can’t say we are going to turn around tomorrow and start doing it. It’s certainly on our radar to look at as we expand the work we are doing here,” Galrick said.

However, she did informally confirm Facebook was working with security agencies.

“We have a number of different conversations with different community groups around this, so we can understand how community’s are impacted by this and we often have conversations with different parts of the government about questions to do with how our policies operate but I can’t really confirm or deny anything like that on the record,” she said.

However she added: “We go and talk the Attorney General’s department to make sure we are understanding their issues and concerns, and they have the ability to report content to us.”

Commenting on the launch of a pilot in Australia – to help with the removal of ‘false news’ and click bait content – Garlick said the company hadn’t established relationships in Australia for the disputed flags pilot.

Facebook are still trying to resolve a way to reduce ‘false news’

“We are only in initial pilots in the US and in different countries in Europe, so we haven’t established relationships here in Australia yet, for the disputed flags pilot.

“It’s certainly on our radar, and what we are trying to do is learn from the pilot and to make sure the tools and the structure by which it operates is in a robust position, so that we can then look to roll it out into different countries.”

While it could not confirm the start date of the pilot locally, Kerr assured the pilot in the US was reducing the false sharing of news.

Separate to the disputed flags pilot is another focused on subscriptions, allowing publishers to link their websites to process subscriptions and keep 100% of revenue.

“We respect publishers’ wishes.” Kerr said.

“We respect paywalls, we respect subscriptions. Somebody comes to our paywall platform, they re invited to log in or sign off.

“In terms of how revenue share works on our platform, first and foremost if publishers choose to use that to distribute their content, they keep 100% of the revenue.”

However, the company was criticised for taking eight months to roll out the pilot, with Senators accusing the company of taking a “conservative and cautious approach.”

Kerr: “We respect publisher’s wishes”

Garlick attributed the Facebook’s tarnished public image to the delay, and pointed out the duration length was needed so Facebook could learn.

“This product needs to be seen as an overlay on top of other initiatives that are already in place, in terms of automatic removal of fake accounts,” she said.

However according to Kerr’s statements, of the 10,000 publishers which work with the platform, they divide US$1m (AU$1.260m) between them, which provides them with US$100 (AU$126) a day.

“With the rate of return to publishers, the rate per 1000 views that they get is increasing by 50%. I’m really happy to say the return is increasing month by month.”

“We want to see that number increase.”

Kerr said video, in-stream ads, commercial ad breaks, and revenue and monetisation through branded content were other ways journalists could monetise content.

Asked whether Facebook had their own journalists, Garlick said the company was “not a media organisation,” outlining Facebook’s role was to support journalism through investing in tools.

Kerr added: “We don’t see ourselves a media company, we don’t create content, but we want to be a good partner. We want to be supportive of journalism, and help them thrive.”


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